The home loan rate has changed dramatically over the last 30 years from a high of 22.75% in 1999 to it’s current low of 10%. Since the banks cracked down on their lending criteria last year, the mood has changed and the banks are again offering 100% home loans to qualifying applicants. The change is essentially in the percentage of the purchase price they are prepared to accept risk on while the qualifying criteria remain stringent.
This is a clear indication that we are moving out of the perceived recession and that the banks have faith in the future of property prices.
Salaried applicants with a clear credit record have never had it so good! Interest rates are at their lowest levels in 30 years and some analysts predict that the recent drop in the Purchasing Managers’ Index |(PMI) leaves the door open for another interest rate cut, in spite of the Reserve Bank’s earlier indications that rates should stay on hold. And although FNB’s latest house price index showed a further acceleration in house price growth from 10,1% to 11,9% in April, the current buyer’s market seems set to remain until at least the end of the year.
Self-employed applicants still find it difficult to secure bond approvals, but only if they’re not able to prove their income to the banks’ satisfaction. Ensure that your financial statements are up to date and choose a competent bond consultant to motivate your application properly, and you shouldn’t have a problem.
The miracle of compound interest! Play around with the Bond Calculator and you’ll see that by repaying an extra R312 per month on a R1m bond, you’ll knock 5 years off the term of a 20 year bond and save yourself R433 160!